Last Week in the Federal Circuit (August 23-27): Supporting Damages Expert’s Testimony

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Morrison & Foerster LLP - Federal Circuitry

With Labor Day around the corner and summer coming to a close, the Federal Circuit had a busy week with a lot of precedential opinions to pick from. Below we provide our usual weekly statistics and our case of the week—our highly subjective selection based on whatever case piqued our interest.

Precedential opinions: 9

Non-precedential opinions: 5

Rule 36: 0

Longest pending case from argument: MLC Intellectual Property LLC v. Micron Technology, Inc., No. 20-1413 (253 days)

Shortest pending case from argument (non-Rule 36): Tie between Juno Therapeutics, Inc. v. Kite Pharma, Inc., No. 20-1758 and Larson v. McDonough, No. 20-1647 (51 days each)

Case of the week: MLC Intellectual Property, LLC v. Micron Technology, Inc., No. 20-1413

Panel: Judges Newman, Reyna, and Stoll, with Judge Stoll writing the opinion

You should read this case if: you have a matter involving exclusion of a damages expert’s testimony

Our case this week features the interplay of expert testimony and calculating damages with a sprinkling of the Federal Rules of Civil Procedure and Daubert. The case serves to remind us that even the most established experts—and the parties relying on their testimony—have to provide support for their assertions at the appropriate stage of litigation, lest their valued opinions be tossed aside as baseless, unsupported, and lacking value.

MLC sued Micron for infringing a patent related to computer flash memory. During expert discovery, MLC’s damages expert submitted a report providing his understanding of the technology and of the state of the flash-memory market. The expert further attempted to reconstruct a hypothetical licensing negotiation between MLC and Micron. But Micron argued that the report opined on reasonable royalty rates after MLC had failed to produce key information directed to its damages theory when requested. It also argued that the report failed to provide a reasonable basis of fact or data explaining how the expert calculated the royalty rate.

The district court granted Micron’s various motions seeking to preclude portions of the expert testimony under Rule 37 of the Federal Rules of Civil Procedure. But the district court certified its orders for interlocutory appeal under 28 U.S.C. § 1292(b), and the Federal Circuit granted MLC’s petition for permission to appeal.

On appeal, the Federal Circuit held that the district court had not abused its discretion in prohibiting the expert from testifying about the reasonable royalty rate at trial. The royalty testimony was “not sufficiently tethered to the evidence presented” and “rest[ed] on an inference” that went beyond what the presented information implied. The Court also suggested the calculation should “rest[] on an accepted scientific theory or technique.”

The Federal Circuit also found no abuse of discretion in the district court’s order striking portions of the expert report. Federal Rule of Civil Procedure 37 prohibits parties from relying on evidence that they failed to disclose adequately in response to interrogatories. Applying Ninth Circuit law, the Federal Circuit explained that district courts have “particularly wide latitude” in applying that rule. Although it found that the district court based its reasoning in part on a factual error, it saw no abuse of discretion in the district court’s conclusion that MLC had failed to disclose during fact discovery its claim that two previous licenses reflected a specific royalty rate and had failed to disclose extrinsic documents that its expert report later relied on. Those failures were enough to sustain the district court’s order to strike under the deferential standard of review.

Finally, the Federal Circuit affirmed the district court’s grantof Micron’s Daubert motion to exclude MLC’s expert opinion on reasonable royalty for failure to apportion the patented parts from the non-patented parts of the invention. The Federal Circuit asserted that “[w]e have repeatedly held that when the accused technology does not make up the whole of the accused product, apportionment is required.”

In a clean, one-two-three punch, the scope of MLC’s expert opinion was greatly limited because of what the district court found were untimely disclosures and unsubstantiated conclusions. Although the Federal Circuit’s opinion is lengthy, it is worth a read for its discussion of what district courts can require be disclosed during fact discovery and how those requirements relate to expert discovery.

[View source.]

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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